Actually, "efficient" factories that don't face competitive pressures (i.e. that don't drop their prices) will have a lower multiplier.
Money spent on wages gets spent and circulated within the economy at a higher rate than money that is diverted towards profits (which tends to bid up the value of fixed assets in a demand constrained environment).
>the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities.
Well, if you assume that opportunities for "demand producing activities" (i.e. products which will convince the Japanese to stop saving at such a high rate) are plentiful then yes. In the 80s perhaps.
But they're not. The Japanese really can't be convinced to spend.
There's no particular reason to assume that a more productive business will be more profitable than a subsidised one. That's a completely separate question.
If industry is more efficient, the Japanese people don't need to spend more. The same rate of spending will buy more goods and services, supporting more production by more businesses, generating more demand.
You can't get away from the fact that the same amount of money spent on production by a more efficient company generates more demand for the things that company needs in order to produce. Production by capital-consuming activities by its nature generates demand.
>There's no particular reason to assume that a more productive business will be more profitable than a subsidised one.
A business that fires half of its workers is likely be more profitable than one that doesn't, assuming it can get by without them.
>The same rate of spending will buy more goods and services
Wages will typically be spent on goods and services. Profits usually bid up the price of fixed assets (e.g. housing in San Francisco & New York, NASDAQ, bonds).
>You can't get away from the fact that the same amount of money spent on production by a more efficient company generates more demand for the things
Money spent on wages gets spent and circulated within the economy at a higher rate than money that is diverted towards profits (which tends to bid up the value of fixed assets in a demand constrained environment).
>the inefficient one consumes money that could otherwise be invested in more demand producing factories, employing workers in demand producing activities.
Well, if you assume that opportunities for "demand producing activities" (i.e. products which will convince the Japanese to stop saving at such a high rate) are plentiful then yes. In the 80s perhaps.
But they're not. The Japanese really can't be convinced to spend.